European imports of liquefied natural gas (LNG) surged by 63% in 2022 to offset the decline in Russian pipeline gas, according to a report by the International Energy Agency.
The strong demand from Europe has driven liquefied natural gas (LNG) prices higher, leading the global market to double in value in 2022, reaching a record amount of $450 billion, even though the volume only increased by 6%. For 2023, the International Energy Agency (IEA) predicts a further 4.3% growth in the global market.
“The Europe has been the primary driver of the increase in LNG demand by turning away from Russian pipelines. LNG deliveries to Europe increased by 63% last year,” the IEA highlighted in a report published on February 28th.
According to the IEA, the volumes of imported LNG in Europe increased by 66 billion cubic meters, with the United States being the primary beneficiary, supplying two-thirds (43 billion cubic meters) of this additional flow.
Europe found additional supply from other suppliers as well: Qatar (5 billion cubic meters), Egypt (5), Norway (3), Angola (2), and Trinidad and Tobago (2). The IEA also reports that Russia delivered 2 billion cubic meters as well.
Doubled orders for LNG carriers
At the end of the year, during the peak of this LNG race, with storage sites full and a mild winter, “over 30 LNG-filled ships” were waiting to “plug into regasification facilities in Europe instead of selling their cargo at a lower price elsewhere,” according to the IEA.
The war in Ukraine has also increased the need for LNG terminals and LNG carrier ships. According to data from Refinitiv cited by the IEA, orders for LNG carriers more than doubled (+130% compared to 2021) and reached a record of 165 in 2022. The report further notes that Chinese shipyards accounted for over one-third of the global orders.
In contrast, the total global consumption of gas (LNG and pipeline gas) contracted by 1.6% in 2022 to 4.042 trillion cubic meters. According to the IEA, global gas consumption is expected to remain stagnant this year. The report highlights uncertainties that affect the market, particularly related to the Chinese economy.
